AI will also create new ethical and social issues around privacy, bias, accountability, and trust: Anndy Lian

AI will also create new ethical and social issues around privacy, bias, accountability, and trust: Anndy Lian

As part of our rapid fire interview series, Anndy Lian, an Intergovernmental Blockchain Expert shares his quick take on the AI evolution, how it will impact the workforce in APAC, and his favourite thing about AI.

Anndy Lian is an Intergovernmental Blockchain Expert and Best Selling Book Author “NFT: From Zero to Hero”. He has provided advisory across a variety of industries for local, international, public listed companies and governments. He is an early blockchain adopter and experienced serial entrepreneur, book author, investor, board member and keynote speaker.

As part of our rapid fire interview series, Anndy shares his quick take on the AI evolution, how it will impact the workforce in APAC, and his favourite thing about AI.

Can you share with us your background and experience?

I have started to look at cryptocurrencies in 2013 and then blockchain in 2017. The first time I got to know what blockchain can do is at a closed door session with a pharma company. Blockchain’s ability to fight counterfeit is very effective. I have then gone full time into this space since. I gave advice to governments, listed companies, leading crypto exchanges and the list goes on.

As a tech leader, what’s the first thing you do when you start your work?

The first thing I do when I start my work is to check the latest news and trends in the tech world, especially in the areas of blockchain, AI, and cybersecurity. I like to keep myself updated on the current developments and challenges in these fields, and how they affect the society and the economy. I also like to connect with other tech leaders and experts, and exchange ideas and insights on how to leverage technology for positive impact.

What does AI evolution mean to you in one sentence?

AI evolution means the continuous improvement and advancement of AI systems and applications, driven by human creativity and curiosity, to solve complex problems and enhance human capabilities.

What is one way in which AI will impact enterprise security?

One way in which AI will impact enterprise security is by enabling more effective and efficient detection and prevention of cyberattacks, such as malware, phishing, ransomware, and DDoS. AI can help analyse large volumes of data, identify patterns and anomalies, and respond to threats in real time. AI can also help automate and optimise security processes, such as authentication, encryption, and backup.

What do you see as the biggest transformation that AI will bring about in the workforce in APAC?

The biggest transformation that AI will bring about in the workforce in APAC is the creation of new jobs and opportunities that require higher levels of skills, creativity, and collaboration. AI will also augment and complement human workers, by taking over repetitive and mundane tasks, and providing insights and recommendations. AI will also enable more flexible and remote work arrangements, as well as lifelong learning and upskilling.

One challenge which AI will pose for the workforce in APAC.

One challenge which AI will pose for the workforce in APAC is the potential displacement and disruption of existing jobs and industries, especially those that rely on low-skilled and manual labor. AI will also create new ethical and social issues, such as privacy, bias, accountability, and trust. Therefore, it is important to ensure that AI is developed and deployed in a responsible and inclusive manner, that respects human rights and values, and that benefits all stakeholders.

What’s your favourite thing about AI?

My favourite thing about AI is its ability to generate novel and innovative solutions and content that can inspire and amaze humans. For example, AI can write poems, stories, songs, code, and more, using its own words and knowledge. I find this aspect of AI very fascinating and exciting, as it shows the potential and diversity of AI creativity.

AI can also improve productivity and efficiency, by automating and optimising various tasks and processes, such as data analysis, decision making, customer service, and more. AI can help humans save time, money, and resources, and focus on more strategic and creative work. AI can also enhance quality and accuracy, by reducing errors and biases, and providing insights and recommendations.

What is one advice you would like to give organisations when it comes to AI adoption ?

One advice I would like to give organisations when it comes to AI adoption is to start small and scale up gradually, by identifying and prioritising the most relevant and valuable use cases and applications of AI for their business goals and customer needs. I would also advise them to involve and empower their employees and customers in the AI journey, by providing them with the necessary training, support, and feedback. Lastly, I would advise them to adopt a culture of experimentation and learning, by testing and iterating their AI solutions, and measuring and improving their outcomes and impacts.

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How to Prepare for Bitcoin Halving in April 2024: Expert Tips & Projections

How to Prepare for Bitcoin Halving in April 2024: Expert Tips & Projections

Bitcoin halving is the most anticipated event of the crypto industry that occurs once every four years. According to the Bitcoin halving countdown, April 18, 2024, is the date when Bitcoin is expected to mint its 840,000 block and subsequently undergo its fourth halving.

From an investor’s perspective, halvings are seen as milestone events that have ushered crypto bull markets. For miners, halvings bring challenging business conditions where miner revenues are cut by half and production costs per Bitcoin theoretically double.

In this article, we conduct an in-depth Bitcoin halving analysis, as well as provide potential post-halving price scenarios and tips for both investors and miners from industry experts on how to prepare for the fourth Bitcoin halving cycle.

Key Takeaways

  • Bitcoin is expected to undergo its fourth halving on April 18, 2024.
  • Historical charts showed Bitcoin prices took between 12 to 18 months to peak post-halving.
  • The introduction of spot BTC ETFs has created unprecedented market conditions.
  • Graeme Moore, the head of tokenization at Polymesh Association, predicted that the price of BTC could go as high as $100,000 past halving in 2024.
  • Anndy Lian, an intergovernmental blockchain expert, predicted that the BTC price post-halving has the potential to surge 10% higher than its all-time high, which currently surpasses $73,000.
  • With more funds flowing into BTC ETFs, Lian added, the BTC price could go up an additional 30% by the end of the next quarter.
  • Yuya Hasegawa, an analyst at the crypto exchange Bitbank, expected a strong rally during the latter half of this year.

How to Prepare for the Next Bitcoin Halving

Tips for Investors

The crypto market is unpredictable, but that shouldn’t keep investors from learning about historical patterns and possible outcomes to stay ahead of the curve.

Here is how investors can prepare for the Bitcoin halving event.

1. No Near-Term BTC Price Increase Guaranteed

Financial markets are forward-looking. Trades are made based on the potential of future returns. Therefore, it may come as no surprise that investors have been accumulating Bitcoin since the fourth quarter of 2023 in preparation for Bitcoin’s fourth halving, having seen BTC prices surge in past halving cycles.

As of March 13, 2024, Bitcoin prices have gained over 70% year-to-date and hit new all-time highs of over $73,000 without seeing a significant correction in the first three months of 2024.

Given the predictable and anticipated nature of halving events, you should keep in mind that rational investors are most likely to buy Bitcoins ahead of the event.

Therefore, the Bitcoin halving event does not guarantee an immediate uptick in Bitcoin prices. We could even see a sell-the-news event as euphoria around Bitcoin halving fades away.

2. Positive Long-Term Impact of Halving

Over the mid-to-long term, halving is expected to have a positive impact on the price of Bitcoin due to the reduction of BTC supply. Supporting this theory is the historical market data that showed that Bitcoin prices surged astronomically over the next 18-month period following past halving cycles.

  • According to Fidelity Asset Management, Bitcoin prices surged as much as 10,485% within 371 days after the first Bitcoin halving.
  • Following the second halving in July 2016, Bitcoin prices rose as much as 3,103% over the next 525 days.
  • Similarly, after the third halving period in May 2020, Bitcoin prices jumped as much as 707% within the next 546 days.

3. Impact of Spot BTC ETFs

The introduction of spot BTC ETFs has created unprecedented market conditions that halving cycles of the past did not encounter.

Since the spot BTC ETFs were approved on January 11, 2024, the popularity of the instrument has created a Bitcoin demand shock.

For reference, the average BTC daily demand on ETF trading days currently stands at 4500 Bitcoins surpassing an average of 921 new Bitcoins minted per day, Coinshares reported.

If the spot BTC ETF remains consistent when the supply of Bitcoins reduces by 50% post-halving, the supply-demand principles of economics tell us that Bitcoin prices might rise.

Tips for Miners

One of the biggest challenges that the BTC halving event poses for miners is the reduction in mining rewards.

Apart from the 50% cut, the halving might also increase competition, heightening mining difficulty and potentially increasing the price of transaction fees.

Yuya Hasegawa, an analyst at the crypto exchange Bitbank, told Techopedia in a note that miners often have to consider how they will manage to operate with 50% less revenue.

“This has affected Bitcoin’s hash rate and the network’s difficulty post-halving, as some of them halt operation until the difficulty drops low enough for them to make a profit again. Some others sell their Bitcoin holdings to make up for decreased cash flow.”

However, Hasegawa added that miners should also consider the release of spot BTC ETFs, which could make the situation a little different.

This is because spot BTC ETFs are buying more than they can produce almost every day, thus overwhelming the BTC supply.

“If the ETF inflow continues to overwhelm Bitcoin’s supply, which it probably will since it already is buying more than the network can produce in a day even before halving, the price may continue to rise post-halving, and that could maintain mining profitability.”

Moreover, miners should also prioritize energy efficiency as the cost of electricity is a major component of mining expenses, Anndy Lian, an intergovernmental blockchain expert and the author of NFT: From Zero to Hero, explained.

This can be done through the use of efficient hardware and access to low-cost energy sources, which can help maintain profitability post-halving.

Lian told Techopedia:

“In the past, most miners looked at standard operation costs. I hope they will do more research and stay informed about market behaviors and trends to make educated decisions regarding their operations. They should evaluate their financial health, including debt levels and capital reserves, to withstand potential revenue drops due to the halving. This would also give them a gauge on how fast they expand.”

Bitcoin Price Scenarios to Consider With Approaching BTC Halving Event

Post-Halving Bitcoin Price Action: Analyst Views

Historically, BTC halving events led to the cryptocurrency’s price increases due to the reduced supply of new Bitcoin tokens entering the market.

Lian predicted that the BTC price post-halving has the potential to surge 10% higher than its all-time high, which currently surpasses $73,000.

However, he added that post-halving and with more funds flowing into BTC ETFs, the BTC price could go up an additional 30% by the end of the next quarter.

“It’s also worth noting that predictions vary widely, and the actual outcome will depend on a multitude of factors, including market demand, investor sentiment, and broader economic conditions. Always remember that investing in cryptocurrencies carries risk, and prices can be highly volatile. It’s advisable to conduct thorough research and consider seeking advice from financial experts before making investment decisions,” Lian added.

The launch of spot BTC ETFs earlier this year was a huge success, and their demand could grow even bigger later in the year, according to Hasegawa.

He added that while the Federal Reserve is still waiting for inflation to calm down, there is a possibility they could start cutting rates, which could increase demand for both BTC and ETFs and facilitate more cash flow.

Bitbank’s Hasegawa concluded:

“Furthermore, halving will crunch Bitcoin’s supply, so we could expect that those three elements (rate cuts, ETFs, halving) will together create a strong rally sometime during the latter half of this year.”

Graeme Moore, the head of tokenization at Polymesh Association, predicted that the price of BTC could go as high as $100,000 past-halving in 2024 as the cryptocurrency is already experiencing massive heights.

“We are already seeing the effect of the upcoming halving with a 50% increase in price since February. Bitcoin is now over $72K. In addition, the relentless bid from the new Bitcoin ETFs is proving that the broader market is beginning to see the value in a global, decentralized, provably scarce asset. If the previous cycles are an indicator, the price of Bitcoin will continue to rally into the halving and after.”

Historical Bitcoin Halving Analysis

A study of historical Bitcoin halving charts showed that BTC consistently saw price increases in the weeks ahead of halving events. Following halving events, Bitcoin showed a tendency to trade within a range in the next months.

Following the second Bitcoin halving, BTC price traded range bound between $600 and $800 from July 2016 to November 2016.

Similarly, following the third Bitcoin halving cycle in May 2020, BTC traded in the $8,000-$14,000 range for the next six months before finally breaking out to scale new all-time highs.

Historical charts also showed that Bitcoin prices took between 12 months to 18 months to hit the peak price during the first three halving cycles.

Market catalysts that supported Bitcoin prices during each cycle included the European debt crisis of 2009-2012, the initial coin offering (ICO) boom of 2016, and ultra-low interest rates of the post-pandemic era.

The Bottom Line

The upcoming BTC halving is poised to impact both investors and miners. While historical data suggests a potential for long-term price increases, short-term volatility and uncertainty remain prevalent.

Investors should exercise caution, considering the unpredictability of market reactions post-halving, and conduct thorough research before making investment decisions.

Miners facing reduced rewards and heightened competition must prioritize efficiency and strategic planning to navigate the challenges ahead.

As the crypto landscape evolves with the introduction of spot BTC ETFs, staying informed and adaptable will be crucial for all stakeholders in the Bitcoin ecosystem.

Source: https://www.techopedia.com/how-to-prepare-for-bitcoin-halving

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Active ETF and AI: A Promising or Perilous Combination?

Active ETF and AI: A Promising or Perilous Combination?

Exchange-traded funds, or ETFs, are popular investment vehicles that offer exposure to a basket of securities, such as stocks, bonds, commodities, or cryptocurrencies. ETFs trade on exchanges like stocks, making them easy and convenient to buy and sell. Most ETFs are passively managed, meaning they track an index or a benchmark and aim to replicate its performance. However, some ETFs are actively managed, meaning they have a fund manager who makes decisions on what securities to include in the portfolio and when to buy or sell them. The goal of active ETFs is to outperform the index or the benchmark, rather than just match it.

Active ETFs have been around for more than a decade, but they have gained more attention and popularity in recent years, thanks to the emergence of new technologies and innovations. One of these innovations is artificial intelligence, or AI, which refers to the ability of machines or software to perform tasks that normally require human intelligence, such as learning, reasoning, and decision making. AI has been applied to various fields and industries, including finance and investing. Some active ETFs have started to use AI as a tool or a strategy to enhance their performance and gain an edge over the market.

But how does AI work in active ETFs? And what are the benefits and risks of this combination? I will offer my point of view on these questions, based on the information I gathered from various sources.

How AI Works in Active ETFs

There are different ways that AI can be used in active ETFs, depending on the type and the objective of the fund. Here are some examples:

  • AI can be used to analyze large amounts of data, such as market trends, economic indicators, company fundamentals, and social media sentiment, and generate insights and predictions that can help the fund manager make better investment decisions. For instance, the AI Powered Equity ETF (NYSE:AIEQ) uses an AI system called IBM Watson to build predictive models on the universe of U.S. equities and identify stocks that have the highest potential for capital appreciation. It is equal to 1,000 research analysts, traders and quants working around the clock.
  • AI can be used to automate the trading process, such as executing orders, rebalancing the portfolio, and adjusting the risk exposure, based on predefined rules and algorithms. This can reduce human errors, biases, and emotions, and increase efficiency and speed. For example, the BTD Capital Fund (NYSE:DIP) uses an AI algorithm to trade U.S. stocks based on momentum, volatility, and trend-following factors.
  • AI can be used to create new and innovative investment strategies, such as using natural language processing to analyze the transcripts of corporate earnings calls and identify signals of future performance, or using machine learning to discover hidden patterns and correlations among different asset classes and markets. For instance, the WisdomTree International AI Enhanced Value Fund (NYSE:AIVI) uses an AI model to enhance the value factor by incorporating alternative data sources, such as patent filings, web traffic, and news sentiment.

What Are the Benefits of AI in Active ETFs

The main benefit of using AI in active ETFs is that it can potentially improve the performance and the returns of the fund, by providing more accurate and timely information, by exploiting market inefficiencies and opportunities, and by adapting to changing market conditions. AI can also lower the cost and the risk of active management, by reducing the need for human intervention, by optimizing the portfolio allocation and the trading execution, and by diversifying the sources of alpha. Furthermore, AI can offer more transparency and accountability, by disclosing the methodology and the rationale behind the investment decisions, and by providing performance attribution and feedback.

Some evidence suggests that AI can indeed enhance the performance. For example, an article on CNBC mentioned that using IBM’s Watson platform, the AI Powered Equity ETF (AIEQ) is among the first ETFs to rely on AI for stock selection. It also mention that the information edge of AI is still unclear, but there are signs that some AI-based funds are doing better than their conventional peers. In another research paper published in 2022 by Rui Chen and Jinjuan Ren, titled ‘Do AI-powered mutual funds perform better’, which examined the broader AI capability in the mutual fund domain. They analysed the prospectuses from the EDGAR database of the US Securities and Exchange Commission. It matched them with AI-powered funds using mutual fund data from the CRSP Survivor-Bias-Free US Mutual Fund Database from January 2009 to December 2019. They discovered that these funds do not beat the market in general. However, a comparison reveals that AI-powered funds outperform human-managed peer funds significantly.

What Are the Risks of AI in Active ETFs

However, using AI in active ETFs also comes with some risks and challenges. One of these risks is that AI is not infallible, and it can make mistakes or errors, especially when dealing with complex, uncertain, and dynamic situations. AI can also be affected by data quality and availability issues, such as noise, bias, or gaps, which can impair its accuracy and reliability. Moreover, AI can be vulnerable to cyberattacks, hacking, or manipulation, which can compromise its security and integrity.

Another risk is that AI can be difficult to understand and explain, especially when using advanced and sophisticated techniques, such as deep learning or neural networks. This can create a lack of trust and confidence among investors, regulators, and auditors, who may not be able to verify or validate the logic and the outcomes of the AI system. This can also raise ethical and legal issues, such as accountability, liability, and fairness, when the AI system makes decisions that have significant impacts or consequences.

A third risk is that AI can create new and unforeseen problems or risks, such as market instability, systemic risk, or social and environmental harm. For example, AI can amplify market volatility and contagion, by triggering feedback loops, herd behavior, or flash crashes, especially when many funds use similar or correlated AI strategies. AI can also disrupt the market structure and the competitive landscape, by creating new winners and losers, by increasing the concentration and the power of a few players, or by displacing or replacing human workers.

Summing Up

In conclusion, active ETFs and AI are a promising or perilous combination, depending on how they are used and regulated.

On the one hand, AI can offer significant advantages and opportunities, by enhancing their performance, lowering their cost and risk, and increasing their transparency and accountability. On the other hand, AI can pose significant challenges and threats, by introducing errors and uncertainties, creating trust and ethical issues, and generating new and unforeseen problems and risks.

Therefore, investors, fund managers, and regulators need to be aware and cautious of the benefits and the risks of AI in active ETFs, and adopt appropriate measures and safeguards to ensure that AI is used in a responsible and sustainable manner. For myself, I hope to see how this will work on Bitcoin ETFs. I will try to collect more data to give you a follow up analysis on that.

 

Source: https://za.investing.com/analysis/active-etf-and-ai-a-promising-or-perilous-combination-200596385

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